What Impact Can #MeToo Have on Sexual Harassment Litigation?

The recent surge of high-profile sexual harassment allegations, litigation and the #MeToo movement prompts the question, what impact the trend will have on sexual harassment lawsuits, what type of reforms the movement spur, and whether a backlash is coming?

Possible Reforms

The statute of limitations should be expanded for Title VII, the federal statute providing a cause of action for employees who are discriminated against in the workplace on the basis of, among other things, sex. Title VII gives most employees only 180 days to file a charge with the Equal Employment Opportunity Commission (EEOC). Harassed employees should have more time to bring complaints because there often is not enough time to initiate legal proceedings against their employer, obtain counsel, and prepare and file the necessary documents. Reporting harassment can unlawfully lead to termination, reputational harm, or even violence. Contrast this to most torts including civil assault cases, where plaintiffs have three years to file. Another Title VII weaknesses is its failure to cover employers with less than 15 employees. Sexual harassment should never be tolerated regardless of the employer size.

Non-Disclosure Agreements

Many states are considering banning non-disclosure agreements (NDAs) in sexual harassment settlements. For example, the Arizona House of Representatives is reviewing legislation this month which would void NDAs pertaining to sexual assault and sexual harassment, and in 2016, California banned NDAs in civil cases that could be prosecuted as felony sex crimes. Proponents of these NDA-barring policies point to cases involving serial offenders like Harvey Weinstein, arguing that NDAs allowed a pattern of abuse impacting scores of individuals which could have been prevented had past victims been afforded the opportunity to speak out.

However, the issue is more complicated. Often, NDAs serve as valuable bargaining chips for plaintiffs wishing to settle. While NDAs keep sexual harassers hidden, they can also benefit the particular victim. As prominent women’s rights lawyer Gloria Allred recently observed, “I am not in agreement with restricting the choices that a victim has and requiring her to litigate publicly for many years against a high-profile figure, if that’s not what she wants to do.” NDAs can allow harassment victims to avoid being perpetually associated with their complaint, and affords them privacy. NDAs can help plaintiffs who fear that their sexual harassment allegations may follow them in future employment searches, especially given the poorly kept secret that many employers don’t want to hire individuals with a litigation history. A victim who signed an NDA after making a sexual harassment claim to the Congressional Office of Compliance recently told CNN, “the positive [of NDAs] is that I’m able to put that part of my life behind me without constantly having to revisit it.”

Tax Implications

A recently introduced wrinkle to the NDA conversation is a vague provision of the new tax bill passed in late December. This provision, 26 U.S.C. § 162(q), creates an exception to the general premise that settlements and legal fees are typically considered deductible business expenses. It provides that

[n]o deduction shall be allowed under this chapter for: (1) any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement, or (2) attorney’s fees related to such a settlement or payment.

This provision discourages employers from settling cases when NDAs are on the table, making negotiation more difficult for plaintiffs, but it may wipe out the previously-existing above-the-line deduction plaintiffs received for attorney’s fees. Given the haste with which the tax bill was passed, and the lack of clarity in some of the language in §162(q), both individuals bringing sexual harassment claims and their attorneys will be wise to look out for either a legislative fix or IRS guidance.

False claims and Under reporting

Will the rise in sexual harassment awareness bring about a rise in false claims? A November 2017 Time magazine survey showed that 85 percent of respondents believe women making allegations of sexual harassment are true. The expense and risk involved in filing lawsuits makes it unlikely that increased focus on sexual harassment will result in any statistically significant rise in the already low rate of false claim filing. A far more legitimate issue is the underreporting of harassment. A June 2016 EEOC survey, determined that roughly 60 percent of women have experienced workplace sexual harassment, yet only 30 percent reported it to a supervisor. It follows then that the focus is rightfully on remedying the issue of underreporting.

Long-Term Impact of #MeToo

It’s clear that the long-term impact of #MeToo may be steps toward commonsense reform and fighting for those who have experienced harassment in the workplace and the life-altering ramifications caused by their harassers.

Michael A. Kornbluth

Michael A. Kornbluth is the managing partner of Kornbluth Ginsberg Law Group P.A. Michael has been selected to North Carolina Super Lawyers for years 2014-2018 and a North Carolina Rising Star for years 2011-2013. Michael is currently the vice-chair of the labor and employment law section of the North Carolina Bar Association. He is a past chair of the employment law section of the North Carolina Advocates for Justice. Michael’s main areas of focus are sexual harassment, discrimination and executive severance agreements. Michael is grateful for his law clerk Joseph Hjelt, ’18 UNC Law, for his assistance on this column.